Posted on 01/18/2025 5:58:21 AM PST by untenured
A new paper in the QJE [the Quarterly Journal of Economics], The Global Race for Talent: Brain Drain, Knowledge Transfer, and Growth, by Marta Prato uses extensive data on inventors and their migration to make the following points.
(i) gross migration is asymmetric, with brain drain (net emigration) from the EU to the United States; (ii) migrants increase their patenting by 33% a year after migration; (iii) migrants continue working with inventors at origin after moving, although less frequently; (iv) migrants’ productivity gains spill over to their collaborators at origin, who increase patenting by 16% a year when a co-inventor emigrates.
Notice that migration doesn’t just relocate talent from the EU to the US; it amplifies talent. Preventing “brain drain” would create short-term gains for the EU but retaining talent at lower productivity would stifle long-term innovation and patenting, ultimately slowing growth for both the EU and the world. In short, even the EU gains from sending talent to the US! The effect would be much larger if we can import high-skill immigrants from countries where their skills are even less productive than in the EU. Ideally, other nations could replicate the US institutions that supercharge productivity, creating global economic gains. For now, however, the US seem to be a unique Galt’s Gulch for talent.
Prato concludes with a practical suggestion:
On the migration policy side, doubling the size of the U.S. H1B visa program increases U.S. and EU growth by 4% in the long run, because it sorts inventors to where they produce more innovations and knowledge spillovers.
Of course, when we expand the H1B program, we should allocate the visas by compensation rather than by lottery. (Jeremy Neufeld runs the numbers). In this way, we would get the most valuable workers. And please don’t tell me that we need a lottery so some poor startup can hire workers. No. Unless you have some compelling argument for why there is a massive externality and why lotteries (lotteries!) are the best way to target that externality we should let price allocate.
“when we expand the H1B program, we should allocate the visas by compensation”
Translation: Those who are willing to pay more for talent will be able to get the talent they want. Those who pay less for talent will not be able to import low paid workers.
Those paid the most go to the head of the line.
I do not love H1B.
But, if the hiring company has to pay the federal government $100,000 bounty for every H1B they hire, and if every H1B employee must receive a minimum salary of $250,000 then we would get top talent where we need top talent. But it wouldn’t make sense to get low wage programmers or other such jobs. That part of H1B would dry up real quick.
It all looks great when you’re just talking about talented individuals. But even with talented individuals, it’s never quite just about the talented individual. They usually have family and friends who want to come over, too. Then it can easily turn into a chain migration issue.
Personally, I’m not interested only in the talent angle. I’m interested in whether they will be good neighbors, are productive (i.e., put in more in taxes than they take out in benefits), want to fit in culturally (learn the language at least, eliminate any criminal and stabby tendencies), and make the effort to becoming US citizens. If they can’t be all of those things they should return to where they came from.
BTW: “Galt’s Gulch” in the novel was a by-invitation-only community. And its residents made the effort to keep intruders out and to stay hidden. The US has a long way to go in being anything like Galt’s Gulch for immigrants.
There’s a lot to be said on this hot-button topic, I’m sure. George Gilder provides stock market advice on technology companies and some of the things he has said in the past seem pertinent.
We are probably all familiar with “Intel Inside.” Gilder mentioned the contribution of an Israeli company, providing some of the inside to the Intel inside. So, in that case, at least, you don’t have to be American, or have an H1B visa, to contribute to an American company. Who benefits from advanced Intel (or Nvidia, etc.) technology? Apple, HP and other companies. Also consumers.
We don’t have to do everything right here with US companies and US employees.
Still, over the long term, we should reduce the number of journalism majors and increase the number of engineers. K-12 should better prepare would be (could be) STEM and other students for life.
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